Member Info for strictlybricks

Crossley,

"There is always one sentence of yours that always pops back into my mind. That sentence being..
evaporating £3 of share price in order to hand over £1 of book value to the shareholder…"
..................................

Yes, and, as it happens, I’ve only recently written about this on a private “Investing-in-house-builder-shares” blog I have mainly for the benefit of family & friends.

And it was headed “Asleep at the wheel”

And the person asleep was me..! ??

Because the sentence you’ve referred to is currently far from valid, is it…?

And I hadn’t clocked the implication of this year’s Persimmon price fall..

I mean, Persimmon is now no longer selling at 3 x book value as, by my calculation as of this month, it’s at a PBV of 1.12.

So, that’s as close to shipping a £pound of book value out to an investor to be received as a £pound as doesn’t make that much difference, isn’t it…?

And, as a 70 year old coffin dodger, I have recently shifted my approach when it comes to dividends being paid efficiently from an investor’s point of view.

It’s a debate I’m currently in the middle of on our blog (my moniker comes from that, unsurprisingly perhaps) because, as of Friday just gone, I’ve dipped a toe (well, a foot & ankle perhaps..?) into Persimmon shares having been previously 100% invested in the Ghost Dog of the sector, Bellway.

Whether my leg goes further in, well, I haven’t yet decided…?

But I will say something I’m pretty sure I’ve said before here…

Which is that it is well above my paygrade to be able to call the market and, as I’m more fearful of being in cash when I should be in shares than I am of being in shares when I should be in cash, I remain fully invested throughout.

That might send a shiver down the spines of a few of the commenters here, but no doubt we’re all over 18 and old enough to fight & die for our country, and we all have to own the decisions we make… ??

Strictly

Paddyboy,

My understanding, from what I've read on various websites, is that builders will typically push for exchange of contracts 28 days after having been paid a fairly nominal deposit to secure the new build temporarily.

What I don't know, and what would be interesting to know if anyone reading this who is up for commenting here knows and would like to enlighten me/the rest of us, is the degree to which the big house builders typically did that leading up to the credit crunch ~ I mean, going for exchange of contracts before even starting the build...?

I am aware that Telford Homes did, as I got that straight from the horse's mouth, so to speak, when I spoke to the MD about it at a shareholders meeting back in the day...

And I recall he said they were cacking themselves (that's my word, not his, by the way... ?? ) as he acknowledged they'd had huge balance sheet liabilities as a percentage of equity at the time....

This is a metric I track for the companies I'm interested in, so I can say from my records that Telford's total liabilities in 2008 were 313%.

This compares to Persimmon's, as of the last count for their half time whistle for 2022, which was just 38%.

However, the Telford MD also told me that they needn't have worried, as they'd secured at least 10% deposit exchanges in all cases, and some 20% deposits, and, on the few that didn't complete, they successfully re-sold.

So, they just proved William Ralph Inge's famous aphorism "Worry is interest paid on trouble, before it comes due".
.....................

And there seems to be a fair bit of that on this particular share chat lately, doesn't there...?

And it's got a bit fractious at times ~ but hopefully it won't descend into the toxicity one sometimes comes across in the Telegraph investing comments...?
.....................

But, getting back to it, it seems all the house builders do look for exchange of contracts now as early as they can ~ so, it seems to me, that that plus having much stronger balance sheets than in the face of the previous bad boy, they are much better placed to weather the storm…

How much better placed, I couldn’t say…?

But, personally, I remain fully invested in house builder shares.

Strictly

Paddyboy,

In the scenario you have presented ~ in which a house worth £300k on exchange of contracts had fallen in value to £275k ~ in the event of the buyer pulling out, deciding it was preferable to write off £15k instead of completing, the seller would be entitled to pursue the buyer for any shortfall....

Plus costs incurred, plus interest...

This link may be useful..?

https://propertypressonline.co.uk/2021/02/11/can-you-exchange-contracts-without-a-completion-date/

Strictly

Gary,

I thought I'd start a new thread ~ if only to get my name off the heading..! :-)

As you know, while this is a Barratt share chat, Bellway is my team currently, and this is the company my comments below refer to...

Lots of talk, understandably, here and pretty much everywhere else about house prices...

But it's surely not house prices that directly concern those of us commenting here ~ is it..?

I mean, what matters to us is surely how the house builders themselves do through this...?

And, just for a change, I have some specific numbers for that.

For the 1989 onwards house price slump, Bellway made returns on equity of:
1989 23.5%
1990 10.5%
1991 7.2%
1992 8.3%
1993 20.0%.

So, they had three underperforming years during which they averaged 8.6% ROE which is about half of their long term average of around 16%.

But they kept increasing the dividend throughout ~ albeit somewhat incrementally ~ such that it crept up from 5.0p in 1989 to 5.5p in 1992.

Speaking personally, if whatever sh.tstorm we're currently going through has an equivalent impact to that, I feel I can comfortably live with that...

The credit crunch ~ the other time of significant house price falls since 1952 ~ was somewhat tougher on Bellway.

Their ROEs were:
2007 19.8%
2008 (0.9%) minus
2009 (2.5%) minus
2010 3.1%
2011 5.2%
2002 7.3%
2004 11.6%
2014 15.7%

So that's an average ROE of around 4% for the underperforming period ~ i.e. a quarter of their long term average ~ and for seven years, so somewhat more painful, and the drop in dividend before full recovery was the loss of 3.5 years' income in that it went from 43.1p in 2007 down to 9.0p by 2009 to have then subsequently fully recovered by 2014, now on 52p.

So, if that's what we now have to weather once more, it requires 3.5 years current dividends in back up funds to compensate for the dividend loss.

If what we're currently in, or going further into, is worse than that, then obviously there's the potential for more pain on top.

Bellway's balance sheet is currently in great shape ~ but then, it always has been ~ unlike Barratt and Taylor Wimps in the credit crunch, and they both nearly went t.ts up accordingly...

So, anyway, all the above probably only throws more fog rather than light at the situation, but it does fairly represent the lens through which I'm seeing this...

Strictly

"Fair enough, verified data would be nationwide. "
...............................

Smartepants,

You are correct....

Firstly, in that I do have a poor memory, as I'm sure any of my family would be very quick to confirm... ??

And secondly, yes, these are nationwide figures and, as it happens, from the Nationwide building society....

See the link.

https://www.nationwidehousepriceindex.co.uk/resources

If you do go onto the website, there's an interesting graph showing the track of house prices adjusted for inflation…

And that shows a far wilder swing in prices over time as compared to a graph you might make yourself of just house prices movement, which shows essentially onward ever upward progress marred by two mere blips (in relative terms) since 1952, each for about 20% and the first taking longer to recover than the second.

So, if we are in for an indeterminate period of inflation at an indeterminate rate, and based on history, it seems to me quite feasible for prices to hold ground, more or less, but still giving rise to substantial losses in inflation adjusted terms.

But I make no prediction here, I'm just saying that it seems possible, and if you look at the two graphs discussed above (one of which you'd have to sort for yourself) you can see that it actually came close to that on the two blips, because the inflation-adjusted changes are of a different league of magnitude.

Strictly

Gary,

I have three rules for investing for myself...

The second of these is:

Be prepared to wait up to five years, at any time, before taking any money out...

That's not the same thing as investing for four years and fifty one weeks, and saying to yourself there's only a week to go....

Because tomorrow, or any time, might prove to be be the start, and not the finish, of the required five years...!

Strictly

“Strictly where are you?”
..........................

Gary,

Your comment made me chuckle ~ so thanks for that, at least ~ even though there doesn't seem much to laugh about right now and also I'm not sure what comfort, if any, I have to bring to this...?

But let me say this anyway....

I have acquired an investing philosophy over more than twenty years in this game which is that "I'm more fearful of being in cash when I should be in shares than I am of being in shares when I should be in cash".

And, of course, being invested solely in house builder shares, as I am, clearly I should have been in cash thus far this year then I wouldn't now be sitting on a loss of over 40% for the year to date (that’s if I sold today, because obviously there's no loss taken until either you sell shares or the company concerned goes belly up).

But, while I did manage to largely swerve the covid iceberg, I am resigned to otherwise not being able to foresee these bad boys coming down the pike at me so have to accept the inevitable likelihood of remaining fully invested through these sh.t storms.

For example, my initial response to the so-called mini budget last week was “At last, a Conservative government with a small “c” ~ which just goes to show how much I know!

I have written a fair bit on a separate, private blog about having now shifted to only taking dividends for income and not cashing shares.

While this still leaves me vulnerable to takeovers at stupidly low prices, it also sets me 100% free of Mr Market and instead leaves me solely reliant on how Bellway do (which is where I’m currently invested).

And the last we heard from Bellway, they have done fine for last year and are promisingly well sold so far for this year.

There are plenty of mutterings about house price falls…

In my lifetime so far (and I’m now 70) there have been two ~ both in the region of 20% from top to bottom.

The more recent one, the credit crunch, did knock Bellway’s progressive dividend pay-out off course ~ and it took them seven years to fully recover their mojo in that respect.

But during the first, in the 1990’s, their dividend policy didn’t miss a beat, and progressed upwards every year from 1983 to 2007.

So, here I am… in the bunker… helmet on…. praying not to take a direct hit…!

Strictly

Manfor,

Yes I only invest in house builder shares and yes I took a serious kicking due to the credit crunch of 2007/8 which meant I didn't recover my end-of-2006 value until January 2013.

That was partly self-inflicted as I'd had a large holding in Barratt back then for part of the downbound journey and, as I'd said below in the previous comment, it was hugely leveraged at the time....

An expensive lesson, painfully learned, and a mistake I hope never to repeat.

However, with the notable, probably one-off, exception of the covid iceberg, which I managed to largely swerve in cash & gilts, I have always remained fully invested throughout during more than twenty two years in this investing malarky.

And, furthermore, I anticipate remaining invested throughout from here-on as, sadly, I'm not drinking buddies with Captain Hindsight and I don't ever expect to be able to see the bad boys coming down the pike at me until they've hit me!

So, I necessarily have to go forward in the trust & confidence that, although this sector has always been a seriously bumpy ride in terms of market sentiment & prices, the underlying progress of the companies concerned abides (a bit like "The Dude" perhaps?).

And, up to the last calendar year end, i.e. 2021, I've averaged a 20% year gain over the twenty two years.

I appreciate that others here may seek faster progress than that, but I'm more than happy with that level of average gain and I consider that it's been like winning the lottery in slow motion.

So, right now, I am fully invested ~ that's currently 100% in Bellway, but Redrow is up close to them in terms of perceived value and these days are the favoured company to trade between with Bellway ~ and I anticipate remaining so.

Which means that anyone who is interested can watch my progress, for good or for bad, and maybe say "I told you so" in due course..?

I accept that.

Strictly

Manfor,

In the interests of maintaining share chat harmony ~ generally a good thing to do, in my view ~ maybe there's some gap that could be bridged here..?

For the record, I am a clear rear view mirror investor rather than trying to peer out of a foggy windscreen ~ I mean, I tend to trust the past to guide me for the future rather than rely on the crystal balls of the scribblers in the city....

Barratt in 2008 were very different to Barratt now.

Back then, they had an inexperienced and recently installed MD from another sector (Centrica) who thought it was cool to wade in and employ huge leverage to buy Wilson Bowden in 2006.

This was akin to opening a kayak hire shop just above Niagara...

It also took a great house builder off the market and therefore out of the game for us investors.

The upshot was that, with huge borrowings, Barratt were in an existential crisis come the credit crunch shortly afterwards.

They showed a small negative return on equity in 2007 of minus 6.4%, were then clearly in denial in 2008 with a nominally positive ROE of 0.9%, but then came the storm of land bank write downs and a serious rights issue which landed them with negative returns on equity of 51.4% in 2009, 10.7% in 2010 & 23.6% in 2011.

The upshot is that they still haven't fully recovered from this, and also still have a shedload of goodwill on their balance sheet as a hangover from the WB purchase.

Whereas now, clearly much chastened, they're currently sitting on a stronger balance sheet than Vistry, Crest and Redrow, with liabilities of 56%.

So a fairer comparison now for Barratt, IMO, would be Bellway through the credit crunch as they have never been entranced by big borrowings or takeovers.

They made a small loss in each of 2008 & 9, giving negative returns on equity of 0.9% & 2.5% respectively, and also they never stopped paying a dividend.

And while BDEV's PBV went to absolute ratsh.t, Bellway's PBV also fell to below 0.5 in 2008 at the bottom.

So, Bellway's PBV is currently 0.7, so still possibly a way to fall if it gets worse, and Barratt's PBV is just under 1.0 so, as you've flagged, a helluva way to fall to get down to credit crunch levels.

But, as described above, there is a huge contrast between now and then in respect of Barratt's balance sheet strength…

And the other thing is that none of the housebuilders are talking down their prospects ~well, apart from Inland, but then they hardly count ~ so while I have no opinion on where prices may, or may not, go from here, in the world of likelihoods it seems to be a brave thought to me to assume that they will fall as far as you suggest...?

Strictly

"Strictly, I’m struggling with your 1.02. Would you mind please sharing your figures with me? It would be most appreciated"
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Tim,

If you scroll down several comments to one from me with a sub-heading "CHANGE OF NAME" the calculation is there...

The other company with a shedload of goodwill & intangibles before you get to net equity is Barratt....

Anyway, hope that clarifies it...?

Strictly

Gary,

My take on all this is that you just need to take four numbers from a company report and that you could then reasonably bin the rest....

Sifting the nugget of truth from the mountain of dross, if you like....

Those numbers are:

1) The net tangible equity on the balance sheet

2) The amount of dividend per share paid out (rather than declared) during the year

3) The number of shares in issue at the year end

4) The total liabilities on the balance sheet....

These, along with a current share price and having the past track record over a long enough period of time for any company ~ preferably decades ~ gives me the essential numbers sufficient to put together all the metrics I require....

I do, of course, read much of a company report too, but I really would be okay about binning it, if it came to it, after having extracted those numbers...

And, for me, give or take, it has been thus so for more than 20 years....

So, I'm happy to track these numbers for Bovis, but probably still need another year or two to see how they are truly shaping up now that Greg Fitzgerald is in charge...?

But I'm probably too wussy to invest in them before that, unless Mr Market somehow presents me with a screaming buy opportunity that I find too compelling to ignore...

Mind you, I'm not holding my breath on that happening...!

Strictly

"I would be grateful for any opinions about house builder Vistry, the man in charge over there is certainly up beat as he’s spending large amounts buying his own company shares at the moment, good to see."
...................................

Gary,

Funnily enough, I wrote about Vistry/Bovis on our private investing blog just a few days ago ~ they've always enjoyed the derisory nickname Battersea in our circle...

This is because, from 1997 to 2019 (when I last updated the particular spreadsheet, Bellway had achieved an average ROE of 17.4% compared to Bovis's 11.9%.

I'm imagining you already well understand the magic of long term compounding, so would quickly understand how big this makes the gap between the two over time..?

From the start of the period, Bellway turned 183p of book value into 2,373p and threw in 975p in divs on top, whereas Bovis achieved a very pedestrian increase from 185p to 855p, with 509p in divs on top.

And this takes no account of 2020, when Bovis evaporated 180p per share of book value due to the purchase of Galliford's house building arm.

Hence the name "Battersea"

Anyway, hopefully the item I've copied & pasted below from the blog helps...?

And as it implies, maybe Bovis will make it into the fold of sensible house builders ~ and that is a very small fold indeed..!
.........................................

CHANGE OF NAME….!

Battersea, aka Bovis, aka Vistry, blew their half time whistle this morning….

I’ve calculated BVPS as £2,366m balance sheet less intangibles £669m = £1,697m tangible equity divided by 221.195m shares in issue = 767.2p BVPS.

767.2p BVPS now less 749.12p BVPS b/f (which was adjusted for cladding reserve) = 18.08p plus 40p div paid in the period = 58.08p reality check EPS for the first half as compared to the declared EPS figure of 39.1p which, without digging into it right now is, I’m imagining, the different timings between Bovis and me on the cladding reserve and also I haven’t checked whether there was any change now on the amount…?.

The upshot is it looks like Bovis could be on for around a 16% ROE for the year as it’s 7.8% for the just the first half.

Bovis have also reduced their balance sheet liabilities from 85% at the start of the year to 69% at the period end… oh that Inland could manage such feats..!

So, all in all, no cigar when they’re compared with Bellway and Redrow, perhaps, but I also feel that maybe it’s time to bring Bovis in from the cold….?

Not too hastily, mind…. I still have them on a somewhat cautionary minus 20% weighting (somewhat improved from my previous rather prejudicial minus 40% for them and this compares to Barratt minus 10% and Taylor Wimps minus 30%), but sufficient for them, IMO, to no longer be known by their epithet Battersea….

So, Muttley, it seems you’ve now found a home…! ??

Strictly

PS.

Tim, it looks like you haven't knocked the intangibles off Bovis balance sheet..?

I've got PBV at 1.02

CSDI,

"Whatever the option taken there is always risk with investing in shares, so everyone should be prepared for a bumpy ride at some stage. If it were all that easy everyone would be rich."
…………………………

And if you're entirely invested in house builder shares, and if your intentional strategy is to remain invested throughout, whatever bad boys come down the pike at you ~ as it is with me ~ then, yes, "bumpy ride" doesn't even begin to describe it and in this game a small side investment in a pair of incontinence underpants is certainly advisable....

Never-the-less, this game has returned an average annual gain of 20% over the past 22 years to the start of this year, for me and my compadres, and I'm not currently seeing any obvious reason why that shouldn't continue...?

So the upshot is that it's compounded a £1,000 up to £54,000 over that time to the start of this year (though I’m taking a market kicking this year to date) ~ which I consider to be like winning the lottery in slow motion, and that is good enough for me...

Apart from that, I'm quite probably the biggest investing wuss writing in this share chat, and I see nothing else even approaching the underlying value of house builder shares, and I'm too fearful to take the risk of so-called growth shares...

I did do an analysis of all the FTSE100 shares some twenty years back, and most of them, in my view, were a long term pile of p..p based on calculating reality check profits for them, using balance sheet movements rather than mythical declared earnings per share…

It was like the line from Kipling “Twisted by knaves to set a trap for fools”, and that’s how I saw it then, it’s how I still see it, and I have kept well clear ever since.

And given that the FTSE100 overall has gone virtually nowhere this century ~ I mean, a 6% total gain in over 22 years is hardly smashing it, is it..? ~ I’m happy & relieved that I chose to avoid it….

Each to their own, though, I guess, and I’m prepared to put up with the potentially gut-wrenching, severe market volatility of this sector because the long term underlying performance makes so much sense to me...

Anyway, I think that's me done for comments here for the time being ~ the sun's out, and a walk up top on the moor beckons... :-)

Strictly

Nomad,

I'm now at the fortunate stage ~ at last ~ whereby the share price doesn't really matter too much to me of itself, only relative to other builders for providing opportunities for trading between them with the aim of continually pursuing best perceived value.

That is other than a stupidly low share price encouraging a potential takeover of course ~ I'm sure that would make me cry....

The reason for the first assertion is that I'm now in the position whereby, on the one hand, I'm not putting any new money in and, on the other, I'm now only taking dividends rather than selling down shares for income.

Which means that in this respect I can regard my holdings the same as being within a private company, i.e. it’s the underlying performance of the company that matters, rather than the share price…

This means that, from my point of view financially, Mr Market can go and do one....

I am still very closely watching the market, though....

Perceived best value for me is very much Bellway as things stand ~ and that's where 100% of my invested capital is right now (being 100% in a single share does daunt some of my crew ~ but they're all over 18 and old enough to fight & die for their country and they necessarily have to come to their own choices in these things).

So I have been watching a slight trend this month so far (though that seems to have stopped today?) of Redrow slipping against Bellway.... I was spread between Bellway and Redrow as of a few weeks ago, and I will happily take another 5% to 10% further shift from here so as to be at least partially back in Redrow again...

It really is as simple as that for me and, if it don't need mending, why try to fix it..?

And for many of my crew saving long term into SIPPs, my rain dance for them is for ongoing low share prices, so their dividends & further cash invested can buy more shares than otherwise....
And if they too arrive at the happy point ~ in due course when they retire ~ that they can rely on just dividends, well, they surely won’t really have to give a fig about the share price either, I would suggest…?

Long way off for some of ‘em, mind…!

Strictly

Nomad,

The figures are all on the Nationwide’s website but, to save you looking, prices peaked in Q3 1989 and didn't recover until Q1 1998 and then prices peaked again Q3 2007 and didn't recover again until Q2 2014.

However, you’re commenting here implies you're either invested in, or are interested in investing in, house builder shares...?

Putting aside that nutter Mr Market and whatever he may do with share prices in the interim, through the first nine year slump, Bellway still averaged 15.2% return on equity...

How bad is that...? The Ghost Dog of the sector.

For the second slump of seven years, they only averaged 5.6%, but then that included the credit crunch.

By comparison, Persimmon outperformed them slightly during the credit crunch with an average of 6.9%, though they underperformed Bellway through the '90's with an average ROE of 14.7%.

But do bear in mind that, firstly, you have to pay a lot more, and I mean a lot more, in PBV terms to own Persimmon shares compared with Bellway shares and, secondly, Persimmon now blow most of their earnings in dividends to keep the share price up (at least, I suspect that's the main reason?).

And I appreciate that saying that is controversial in these pages, but paying out dividend at a PBV of 3.0 ~ which has been a typical PBV for Persimmon in recent years ~ means effectively evaporating £3 of share price in order to hand over £1 of book value to the shareholder…

That, plus having far less retained profit for future growth….

But, of course, that doesn’t show up in any given moment in time in the metrics of PBV, ROE or dividend yield.

Separately, Tim, I replied to you on BDEV chat.

Strictly

"Looking on the Stockopedia ratings to these companies I wandered if you had any views on their “Rankings” of these stocks? I know you favour BWY although they seem to lean towards TW and rate Bdev the weakest. "
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Tim,

To be honest, I don't really pay any attention to what the scribblers have to say..... being cynical about both their motives & their competence, I prefer to use Mathew 7.16 as my guide (I'm not religious, BTW, but I'll still leave you to look that one up?).

Bellway is affectionately known as "Ghost Dog" in our circle (and that's intended as a compliment to them..... another thing to check out, maybe, if you're not familiar with the film of the same name?).

Go back 40 years... Bellway have averaged a return on equity of around 16% over that time... they were the only house builder of note to keep paying a dividend throughout the credit crunch.

By contrast, Barratt nearly went broke twice during that 40 years, and Taylor Wimps also nearly went belly-up due to the credit crunch and have yet to fully recover.

Yet, on a PBV basis, Bellway are cheaper than both ~ that’s what I mean by Ghost Dog…

Tim, I obviously don't know how long you've been in this investing malarkey but, for me, it's now over 22 years ~ and it's given me a good living over that time and, for nearly all of that, investing has been my sole source of income apart from an OAP in recent years...?

But if, like me, you're only interested in a very few companies ~and for me that's about half a dozen at most ~ it's surely worth digging as far back as you can into each of those companies' figures on their websites to form your own view..?

I have no idea how good, or otherwise, said scribblers are, but if they're on a level with the financial journalists writing in the Telegraph on-line (where I post an occasional comment under the moniker Gunga Din, usually in response to, or in support of, a prominent & sometimes controversial commenter there who goes by the handle of Bogdan and who thoughts expressed there, in my view, are well worth reading) then that wouldn't be much of a commendation.

I don’t know how far back you’ve read on my stuff here on LSE…?

You no doubt know that you can click on any poster’s name and scroll right back through their stuff… I tend to comment here in fits and starts, often when it’s peeing with rain here (I live 1,000 feet up on Dartmoor, so we get a fair bit of dampness…) so I’m not getting out for a walk or a paddle…

And, as ever, DYOR and all that fine stuff….

Strictly

TimV

Your comment below crossed mine while I was typing...

That's a good link you’ve put up which does, in fact, draw upon the same website as I've used ~ the Nationwide's ~ and that graph is a permanent & regularly updating feature there...

So, as a footnote to my previous comment, I have referred to actual house prices, whereas the graph uses inflation-adjusted prices.

And inflation-adjusted prices do seriously accentuate the ups and downs of the graph ~ it looks truly horrific, doesn't it...!

So, it is helpful to also consider this in straightforward cash prices ~ and, as I said below, we're talking about 20% from top to bottom for the two slumps on that basis ~ otherwise there's a tendency for over-large percentages to be bandied around.

BTW, the graph is hardly implying an imminent house price crash either, is it..?

I mean, that's not to say that one wouldn't happen, only that it's not apparent from the graph...

Strictly

"Yes of course house prices will correct every decade or so and we may well be in for a correction but I’m sure there won’t be a crash, by that I mean 10% yes possible, 40% no chance."
..............................

Gary,

The Nationwide website is useful for the sort of discussion underway here.... especially if, like me when it comes to investing, you prefer a clear rear view mirror rather than a foggy windscreen, and if, also like me, you're more comfortable in the world of likelihoods rather than a mythical world of certainties...

And I’m aware that many don’t subscribe to that view, but I’m just giving you my approach to this…

https://www.nationwidehousepriceindex.co.uk/resources/f/uk-and-regional-affordability-indicators

The Nationwide shows that we have had two house price slumps of any note during my lifetime so far ~ and I'm now 70…!

Two elements to this.

Firstly, each time, the overall price drop was around 20%, not 40%...

So, while ~ and who knows for sure? ~ we may, or may not, have a price drop coming down the pike at us and it may, or may not, be a full fat 40%, that's never happened in the UK over the past 70 years at least.

And, secondly, each time, overall mortgage costs as a percentage of first time buyer income had to reach 46% or more to trigger the house price slumps.

They did, in fact, go as high as 48.4% in Q21989 and to 46.0% in Q42007.

Whereas, as at Q22002, the most recent figure is 31.9% ~ which is seriously unexceptional...

So, I would say the all above tends to support your view, Steve....?

I would also say that, for something as significant as the chances of a coming big house price fall ~ and especially for people here as the inference is that they are investing in house builder shares? ~ it's surely worth checking the numbers that are readily available…?

And these are Nationwide's numbers, based quite mundanely on many houses sold and many mortgages raised....

Strictly

"BDEV - 2008 crash we saw 23p yes 23p a share.
High of £8.90 12yr later. 37x upside!!!!

Persimmon - 2008 crash £1.80 2020 high £33.20 18x

TW - 2008 Crash 4p 2020 high £2.37 59x

£10k in TW in 2008 recession sees you with £600k + "
..................................

Indigo,

The difference between Persimmon, on the one hand, and Barratt & Taylor Wimps, on the other, is that Persimmon had to do a 20% plus write down on their landbank which, okay, was painful enough.

However, Barratt & Wimps were under existential threat as they'd seriously gone Pete Tong with their balance sheets in respect of far too much leverage, and each had to undertake a serious rights issue in order to survive.

If either of them hadn't got their rights issues away ~ and it certainly wasn't a given back then considering the state the economy was in ~ then they would have likely gone belly-up, and the 23p, or 4p, invested in each of then respectively would have no doubt gone to ratsh.it once the banks and secured creditors had been there first....

And I speak as a past sinner in respect of Barratt ~ though fortunately I had baled out of them and into other housebuilder shares well before the bottom, it was still a very painful financial experience for me, having to sell the family home in order to swerve having to cash in any shares at stupidly cheap prices...

It was a happy outcome in the end, mind, so I have no regrets about all that given how house builder shares have performed since... :-)

Strictly

"I’ve back dated the RNS and nothing is jumping out at me. Can anybody tell me what happened back in 2016 on the wk commencing 20th June.

Saw it go from £4 to £1! Excuse me if I’m being stupid, maybe i should go to bed."

........................

Indigo,

23rd June 2016 was the Brexit referendum result ~ which caught one or two people out and even including Nigel Farage who had metaphorically thrown in the towel early that evening....

Not sure about your prices quoted for that period, though...?

Redrow's share price dropped from 407p at the opening whistle on 23rd June 2016 and closed at 267p at close of play on the 24th June....

Which was grim enough if you happened to be holding Redrow at the time ~ as I was, with more than two thirds of my entire investment portfolio in just that one share! ~ but I can't see where you got the closing price of 100p from..?

But it did, at least, pretty quickly bounce back from that, within a few months... :-)

Strictly